subject: What You Should Know About Irs Tax Brackets 2011 [print this page] There is nothing more perplexing than the IRS tax code. And additionally complicating concerns is the strange design of IRS Tax Brackets 2011. So loads of taxpayers completely get it wrong. Tax attorney Anthony Parent explains what the myths are, and how to steer clear of frequent entanglements.
The design of tax bracekts comes from the "Progressive" thought that the more your ability to give to government, the more one should contribute. Many people believe this.
The Progressives ultimately won the day in getting the Amendment they needed passed which would grant power to Congress to tax income. Progressives' claims to use the new income tax to just tax the wealthy were quickly ignored.
The 16th Amendment gave Congress virtually unrestrained power to investigate and impose taxes using the IRS Tax Brackets 2011 structure. The original pledge only to assess the tax law against the wealthiest was quickly disregarded. And Congress was just getting warmed up.
What drives the confusion is that there are taxes on income that aren't called income taxes. Well there are employment taxes, which Congress gets to tax, there are Social Security, Medicare and Unemployment insurance taxes.
For individual taxpayers, the current tax brackets are 10, 15, 25, 28, 33 and 35%. Income is not the only factor of tax bracket. Tax filing status also impacts tax rates of taxpayers.
And as strange as it may seem, these tax brackets are not even relevent when it comes to certain types of income earnings like passive real estate income, long term capital gains or dividends. And for these kinds of income earnings, the additional employment and self employment taxes aren't assessed either.
Also, numerous upper income earners are subject to the Alternative Minimum Tax. To further confuse issues, the Alternative Mimimum tax brackets could apply. The Alternative Minimum Tax has completely different tax brackets. Those tax rates are 26 or 28%. The Alternative Minimum Tax brackets are either 26 or 28%. Yet in spite of the lower rate of AMT, the effective tax rate possibly will end up higher as the AMT denies many many significant write-offs. Local and State taxes are not allowed as deductions.
IRS Tax Brackets 2011 are insufficient preparation tools. There is narrow correlation linking income and the tax rate really paid. It is important not to rely on tax bracets for tax planning purposes.
